Thai Economy For The Next Year?

[Cuban]

Can someone thing me how much it decline in the last 12 months?

Bloomberg Charts; SET.

HTH

[colibra]

I don't see how the Thailand economy is not going to experience a slow down if not recession. As exports and manufacturing slows, which it has, and the stock market falls , which its has many of the ills that have befallen other countries are going to be manifesting here in the LOS. I think we are seeing less employment and falling incomes already which will eventually lead to defaults on loans, leading to many of the fanancial problem of other countries, however not to the point of the Europeans countries or the US. Add to that falling tourism and I think you have a recipe for hard times ahead for Thailand.

Mad Mitch I think you are right about oil prices being a reason in the past for wanting to keep the baht to dollar ratio high but with oil prices sliding it would seem to be a mote point now. I feel like a lot the there reasons have as much to do with pride also. Thailand being a cheap country for vacation has a feeling of adding cheapness to the image of thailand. Just a thought.

I think Thailand will weather the storm better than most, as some have already pointed out because of its agriculture bass with many of its people still having roots to the family farms.

[Naam]

What is the logic for keeping the baht at 35 to the $ anyhow? It benefits people like me but i'm a little puzzled with the BOT stance on this issue. I thought a cheap baht benefited Thailand tremendously.

soaring inflation is not a benefit for any country.

I don't mean zimbabwe cheap. Inflation shouldn't increase (as there have already been relative cost of living increases in the past 3 years) much more than that if it returns to 38-42 baht to the $

the Bank of Thailand and Governor Ms Tarisa beg to differ from your opinion.

Maybe but when have the BOT or Ms. Tarisa been right about anything?They are beholden to economic forces greater than their attempts at control.

please be fair Wintermute, try to back up your comments with valid arguments and i will listen. do you have any proof that the BoT and/or Ms Tarisa were wrong about anything? do we expats have the insight and all facts to render a judgment? is the thai economy worse than the econonomy in various developed/ industrialized countries?

the BoT was attacked when it tried to soften the Baht during the period when offshore speculators drove it up. now the BoT is attacked when it tries to stabilise the Baht and guide it to some (sort of) orderly depreciation. when you go back a year or two and read the comments made by those who bitched about the currency movements most of the posters proved with other non Baht related comments that they have no fàcking idea about economics. what they proved was that they possess a wealth of that "no fàcking idea" (except perhaps how much a blowjob costs in x-Bar, Soy Y).

forgive my harsh words but we Klingons speak from our heart and hate beating around bush

[ray23]

Naam what's up with the gold?

As to the BOT hearing the explanation about not having a market anyway at any price, came into focus for me.

[Naam]

Naam what's up with the gold?

As to the BOT hearing the explanation about not having a market anyway at any price, came into focus for me.

my dog is out playing with the gardener instead of dumping his evening load. when he's done i'll ask him (the dog, not the gardener) as i have no idea where gold is going.

[ray23]

When your dog gets back that's not the question.

The question is, why are Thai's buying it now in large amounts. Enough so that they won't sell ingots at the moment?

You or the dogs thoughts?

Edited October 27, 2008 by ray23

[Naam]

When your dog gets back thats b not the quesion. The question is, why are Thai's buying it now in large amounts. Enough so that they wont sell ingots at the moment? Your or the dogs thought?

my thoughts: all Asians love gold and think they are covering their butts for a rainy day when buying gold. sometimes they are right, sometimes they are wrong.

[ray23]

Keep in mind they are buying as the price continues to fall. This seems to be beyond then norm. I haven;t been able to find anything saying the suspension was lifted.

"Suspension of gold bars sale continues

Web www.bangkokpost.com

(BangkokPost.com) - Gold retailers in Bangkok’s Chinatown, better known as Yaowaraj, continued to suspend the sale of gold bars on Monday due to constant fluctuations in global gold prices.

The Gold Traders’ Association earlier ordered local gold retailers to stop trading gold bars during the past weekend, claiming that gold bars were out of stock and its prices in the global market continued to decline.

However, the association will announce when the suspension will be lifted at 2pm Monday.

Meanwhile, the purchasing and selling prices of 15.2 grams of gold ornament on Monday morning were 12,400 baht and 12,500 baht respectively."

[ray23]

As the article says someone is right and someone is wrong which got me, but it does appear that painic may be sitting in here.

"Banks say liquidity loose in money market, tight in credit

SOMRUEDI BANCHONGDUANG

Over the past few weeks, Finance Ministry officials have been warning that the credit crunch that has hit markets across the globe could hit Thailand.

However, the Bank of Thailand, which regulates the financial sector, has been adamant that liquidity conditions remain plentiful in the market.

Who is right? It seems they both are. According to local bank executives, liquidity conditions in the credit market were definitely tightening, although funds remained readily available in the money market.

The Bank of Thailand, like other central banks, has been injecting funds into the money markets to help minimise the impact of the global crisis. The result has helped push down short-term bond yields, with three-month government bonds quoted at 3.48% compared with the central bank's one-day policy rate of 3.75%.

But for consumers and companies, liquidity in the money market matters less than the availability and cost of credit.

Local bankers acknowledge that the rise in credit risk and pronouncements of a global recession to last well into 2009 have resulted in a clampdown in lending. The sharp decline in asset values, whether in stocks or commodities, has also raised concern about debt default as borrowers have seen their financial projections thrown out the window in a crisis said to be the worst in 80 years.

Prasarn Trairatvorakul, the president of Kasikornbank, said banks were naturally tightening their lending criteria due to higher risks.

A similar, albeit much more serious, phenomenon had also struck the US and European markets. While funds were readily available in the money markets, lending activity between banks, let alone between banks and borrowers, had fallen to a trickle due to concerns of credit default.

One benchmark used to track bank liquidity is the ratio of loans to deposits. As of September, the ratio for the country's six largest banks was a relatively low 86%, with KBank the highest of the six at 107%.

Most banks reported double-digit loan growth in the first half, in part driven by increased trade finance and working capital requirements to cope with higher raw material and commodities prices.

KBank, the country's fourth-largest bank, projected loan growth of 17% for the full year. He said even though the bank had met its targets by the third quarter, it sees further room for growth.

Multinational companies in particular were a potential growth segment, especially as foreign banks have come under greater pressure as a result of market turmoil in their home markets.

''You need to have a selective customer strategy, however. We will monitor our export clients closely in 2009, as we see signs of a business slowdown already,'' Dr Prasarn said.

Dr Prasarn said for 2009, KBank had set a wide loan growth target of 10-19%, with a focus primarily on retail banking and mortgage loans.

At ACL Bank, executive vice-president Suree Wipatakanok said liquidity was also relatively strong, but that the bank had tightened its risk screening procedures in light of the more difficult economic environment. ''With just 26.8 billion baht in loans, we have plenty of room for growth,'' she said. ''We aim to expand our loan book to 30 billion baht by the end of the year, representing new growth of eight billion for 2008.''

[VegasVic]

Naam what's up with the gold?

As to the BOT hearing the explanation about not having a market anyway at any price, came into focus for me.

my dog is out playing with the gardener instead of dumping his evening load. when he's done i'll ask him (the dog, not the gardener) as i have no idea where gold is going.

Let me know what your dogs view is The Euro and the Pound will likely get overdone at some point (my guess would be that we are still months not weeks away from that point) and when the Dollar begins to weaken and the Euro bounces back then gold could make a run of sorts. I have to say that the strength of gold recently makes me believe that the buyers are pricing in some external event and not the eventual bottom of the Euro-Pound, but then again thats just a guess your dog could very well have better insight into the gold markets than I do!

[ray23]

Still down to someone is right someone is wrong.

Chamber warns exporters

PHUSADEE ARUNMAS

The global financial crisis will dent Thailand's export economy in both traditional key markets and new destinations such as the Middle East, warns the Thai Chamber of Commerce.

"The coming crisis is really the big problem (for the Thai economy)," said Dusit Nontanakorn, the chamber's vice-chairman. "The government's current economic stimulus measures are not potent enough to address and curb the possible impact. They sound like using aspirin to treat cancer.

"The impact on the country's tourism has already been felt. We expect exports will start falling from next month onward for the United States, Europe and Japan. New markets will follow course, especially the Middle East as the oil price falls. The real impact on the Thai economy will become visible after November."

Businesses are urged to prepare for the coming crisis by shifting their production strategy, he said.

"As consumption freezes, those engaged in producing high-end products need to shift to medium-end to stay afloat," said Mr Dusit. "Those producing low-end products could get into big trouble, as they will directly compete with low-cost products from China."

Pramon Sutivong, the chamber's chairman, said the impact would likely be more severe than expected, but the effect on industries would vary by sector.

"Unlike Thailand's financial crisis in 1997, this new crisis will affect all the real sectors," he said.

To help industries through the crisis, the chamber is preparing to appraise the impact on all business sectors, both in the short term of three to six months and the long term of up to two years.

The results will be released Nov 13.

[ray23]

Well they have fund of 350 billion dollars to ride his out, but how many countries are involved is that under the circumstances a lot of money? Not to mention, they have to agree how to use it. Teh baht ha been brought up several times. It is going to take a lot of money to fight the flow now.

Exports drop 30pct; 1 million job losses seen

Web www.bangkokpost.com

(BangkokPost.com) - The Federation of Thai Industries (FTI) warned that Thailand’s export output has plunged 30 per cent and the slump could prolong till the beginning of 2009, which could leave up to one million people unemployed in the industrial sector.

FTI deputy chairman Thaveekij Jaturajarernkul said after the meeting with FTI provincial chiefs nationwide that the industrial sector may cut 10 to 15per cent of employees, or approximately 900,000 to one million people out of about six million in total. Around 700,000 new graduates would also have more difficulties in finding jobs each year, he noted.

This is due to the global economic recession, and many industrial segments of the country have experienced lower sale orders by about 30 per cent from the United States, the European Union and Japan.

“Many factories have lifted their overtime (OT) and reduced the number of workdays from six to five. Some factories have to lay off 10 per cent of their staff, and the consequences should be more apparent by January 2009,” Mr Thaveekij said.

He urged the government and the private sector to jointly seek plans to cope with the economic crisis because there are no direct solutions at the moment.

Another FTI deputy chairman Thanit Sorat said the export output, particularly from clothing, furniture, ceramics and electrical appliance industries, has dived by about 20 to 30 per cent.

“Thailand is now facing both economic and political crises while other countries have to deal with the global economic downturn, and he could not see the answers to the problems,” Mr Thanit stated.

FTI deputy chairman Dusit Nontanakorn said the economic breakdown is a global problem and the country could not put it under control.

On November 13, the Thai Chamber of Commerce will announce its study on the economic impact on the country’s industries and the plans to manage and address it in the short-term and long-term.

[cmsally]

I somehow see the BOT as fighting a losing battle. It is the first time that really pessimistic articles have appeared in the press and everyone I talk to in business seems to be suffering.

As for my husband's prognosis, he predicts that there will be a lot more people entering the monkhood!

So there will have to be a national effort to get up early and out on the streets with food supplies.

[wintermute]

I somehow see the BOT as fighting a losing battle. It is the first time that really pessimistic articles have appeared in the press and everyone I talk to in business seems to be suffering.

As for my husband's prognosis, he predicts that there will be a lot more people entering the monkhood!

So there will have to be a national effort to get up early and out on the streets with food supplies.

Thailand will probably weather it fine. The middle class will shrink though and that means some of the high end malls and mid-end condos they've been throwing up everywhere will suffer. Not a good sign really. The past couple years was a good chance for them to insulate themselves during bad times but a lot of capital and time was spent on political issues.

[ray23]

Honestly guys I haven't complty lost it yet, I know it's about Iceland. But there is good ifnromation in it as to interest rates and currency manipulationm the effects on inflation Ect:

Iceland Central Bank Raises Key Interest Rate to 18% (Update2)

By Tasneem Brogger and Helga Kristin Einarsdottir

Oct. 28 (Bloomberg) -- Iceland's central bank unexpectedly raised the benchmark interest rate to 18 percent, the highest in at least seven years, after the island reached an aid agreement with the International Monetary Fund.

Policy makers raised the key rate by 6 percentage points, the Reykjavik-based bank said in a statement on its Web site today, taking the rate to the highest since the bank began targeting inflation in 2001. It will publish the reasons for today's move at 11 a.m. local time.

The central bank is raising rates as Iceland, the first western nation to seek aid from the IMF since the U.K. in 1976, faces a prolonged contraction, coupled with possible hyperinflation and rising joblessness. The economy will shrink as much as 10 percent next year, the IMF forecasts. Iceland will receive about $2.1 billion in aid from the Washington-based fund, according to a deal struck on Oct. 24.

This is ``a first step toward opening their currency market and is probably one of the conditions attached to the agreement struck with the IMF,'' said Bjarke Roed-Frederiksen, a Copenhagen- based economist at Nordea Bank AB, the biggest Nordic lender.

Today's increase in the key rate comes after the central bank on Oct. 15 cut it by 3.5 percentage points from 15.5 percent. That move indicated policy makers were focusing on growth and abandoning their target of stabilizing inflation, which may soar as high as 75 percent in coming months, according to Lars Christensen, chief analyst at Danske Bank A/S in Copenhagen.

Daily Auctions

The central bank has been holding daily auctions since the currency's collapse earlier this month with local market makers setting the rate at about 150 kronur per euro. According to Roed- Frederiksen, further rate increases can't be ruled out if policy makers want to strengthen the krona once international traders are granted access to the market.

Iceland's financial regulator took control of Kaupthing Bank hf, Landsbanki Islands hf and Glitnir Bank hf earlier this month, after they couldn't secure short-term funding. That precipitated the collapse of the currency. The central bank on Oct. 7 attempted to peg the krona only to abandon the measure a day later citing ``insufficient support.''

History shows that attempts to save currencies from plunges by raising interest rates are prone to failure. The U.K. on Sept. 16, 1992, boosted its benchmark rate by 5 percentage points in two moves to 15 percent in a doomed effort to keep the pound in a European exchange-rate system. Britain gave up the attempt the same day and canceled the second rate rise; the pound lost 22 percent against the dollar in the final two months of the year.

During the 1997-98 Asian financial crisis, the International Monetary Fund advocated high rates to help restore confidence in sliding currencies. Central banks from Indonesia and Thailand to South Korea and Singapore lifted borrowing costs. South Korea took its main rate to 30 percent in December 1997.

The strategy failed to prevent exchange-rate collapses across the region. South Korea's won lost 47 percent against the dollar in 1997, the Thai baht fell 45 percent and Indonesia's rupiah plummeted 56 percent.

To contact the reporters on this story: Tasneem Brogger in Copenhagen at [email protected];

Last Updated: October 28, 2008 06:03 EDT

[CPH]

A deep recession in the west wil lead to a very deep recession in Thailand with exports falling sharply as well as thourism. That will lead to a falling Thai Baht.

Tourism will fall because houseprices in the west have been supporting a boom in peoples private economy where they lended money every year when the house price had gone up, and then spend the money on new cars, travel, new clothes etc. The dropping house prices will lead to consumers saving and having enough problems with paying their mortgages. Therefore travel to far destinations as Thailand will be hit very hard. That drop in foreign revenue will lead to a falling Thai Baht. All the words from the politicians are only to calm people a little for now. Just take a look at other currencies such as the Korean Won.

[ray23]

The Thai Baht is falling and has been for sometime now, just not as fast a most of us would like to see. But in the end this will probably better for all concerned.

Asian Currencies: Thai Baht, Won Decline on Growth Concern

By Judy Chen and Lilian Karunungan

Oct. 28 (Bloomberg) -- Thailand's baht and South Korea's won fell, leading declines in Asia, on concern that a global financial crisis will hurt the region's economic expansion.

Thailand's baht slumped to an 18-month low on concern that slowing growth and prolonged political unrest will keep overseas investors away. The won slid for a sixth day, extending its loss this year to 36 percent, as foreign fund managers sold more Korean shares than they bought for a 10th day.

``It's basically just risk aversion spreading on to the wider market,'' Goh Puay Yeong, a currency strategist at Barclays Plc in Singapore. ``So there's a huge premium right now in any emerging-market asset.''

The baht dropped as much as 0.4 percent to 34.97 per dollar, the weakest since April 2007, before trading at 34.92 at 4:17 p.m. in Bangkok. The won fell as much as 3.5 percent to 1,495 against the dollar, the lowest since March 1998, before closing at 1,468, according to Seoul Money Brokerage Services Ltd.

South Korea's consumer confidence index dropped to 88 in October from 96 in September, the Bank of Korea said in Seoul today. That's close to the eight-year low of 84 reached in July.

The baht has lost 15 percent so far this year as foreign investors sold $4.3 billion more Thai shares than they bought. Thailand's benchmark SET Index, which plunged more than 10 percent yesterday, rebounded 2.7 percent today.

Anti-government protesters have occupied Government House for more than two months. Thailand has had two premiers already this year following general elections in December.

``Economic concerns and prolonged political uncertainty have kept investors sidelined,'' said Nicholas Bibby, an economist at Barclays Bank Plc in Singapore.

Yen Gains End

The yen fell for the first time in six days against the dollar and dropped the most in almost two weeks versus the euro as a rebound in Asian stocks bolstered investor confidence in higher-yielding assets.

The yen also declined on speculation Japan's central bank will sell its currency for the first time since March 2004. Japanese Finance Minister Shoichi Nakagawa said yesterday the government is ready to act if needed to halt gains in the yen, which earlier traded near a 13-year high against the dollar.

``Equities are rebounding, giving some assurance to investors,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``There also are fears of possible intervention by Japan. All of this is causing selling of the yen.''

Japan's currency dropped to 94.72 per dollar, from 92.78 late yesterday. It reached 90.93 on Oct. 24, the highest since August 1995. The currency declined 2 percent to 118.33 per euro from 115.92 yesterday, when it reached the strongest level in more than six years.

Ringgit, Rupiah

Malaysia's ringgit slid to its weakest since December 2006 as the Kuala Lumpur Composite Index of stocks declined as much as 6.7 percent today.

``The ringgit has more downside as the stock market is still searching for the bottom,'' said Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur.

The ringgit fell as much as 0.5 percent to 3.6005 per dollar before trading little changed at 3.5830, according to data compiled by Bloomberg.

Indonesia's rupiah rebounded from the lowest level in seven years as President Susilo Bambang Yudhoyono said today the government will take ``quick'' action to support the currency. It has fallen 12 percent in October as overseas investors sold $145 million more of the nation's stocks than they bought.

Indonesia's central bank sold dollars today at a level of 12,000 rupiah, according to Joanna Tan, an economist at Forecast Pte in Singapore. Central banks intervene in currency markets by arranging purchases or sales of foreign exchange.

The rupiah rose 0.5 percent to 10,900 versus the dollar, according to data compiled by Bloomberg. It touched 11,900, the weakest level since April 2001.

Forward Contracts

Non-deliverable forwards contracts show traders are betting the currency will weaken 24 percent to 14,300 against the dollar in the next 12 months. Forwards are agreements in which assets are bought and sold at current prices for delivery at a specified future date. Non-deliverable contracts are settled in dollars.

Elsewhere, Vietnam's dong was little changed at 16,842.5. The Philippine peso rose 0.6 percent to 49.12. Taiwan's dollar climbed 0.2 percent to 33.438. India's financial markets were shut today for a public holiday.

To contact the reporter on this story: Judy Chen in Shanghai at [email protected]; Lilian Karunungan in Singapore at [email protected].

Last Updated: October 28, 2008 05:52 EDT

[Naam]

A deep recession in the west wil lead to a very deep recession in Thailand with exports falling sharply as well as thourism. That will lead to a falling Thai Baht.

Tourism will fall because

houseprices in the west have been supporting a boom in peoples private economy where they lended money every year when the house price had gone up, and then spend the money on new cars, travel, new clothes etc. The dropping house prices will lead to consumers saving and having enough problems with paying their mortgages.

Therefore travel to far destinations as Thailand will be hit very hard. That drop in foreign revenue will lead to a falling Thai Baht. All the words from the politicians are only to calm people a little for now. Just take a look at other currencies such as the Korean Won.

applies exclusively to the U.S. of A., definitely not to €urope. but i agree with you that tourism (not only in Thailand but worldwide) will suffer as we are facing a severe global recession which will last longer than some months.

[LaoPo]

A deep recession in the west wil lead to a very deep recession in Thailand with exports falling sharply as well as thourism. That will lead to a falling Thai Baht.

Tourism will fall because houseprices in the west have been supporting a boom in peoples private economy where they lended money every year when the house price had gone up, and then spend the money on new cars, travel, new clothes etc. The dropping house prices will lead to consumers saving and having enough problems with paying their mortgages.

Therefore travel to far destinations as Thailand will be hit very hard. That drop in foreign revenue will lead to a falling Thai Baht. All the words from the politicians are only to calm people a little for now. Just take a look at other currencies such as the Korean Won.

2008-06-13 15:43:18: So: When Will -farang- Tourism To Thailand Come To A Halt ?, This year...next year ?

http://www.thaivisa.com/forum/So-farang-To...nd-t194405.html

4 1/2 months later we know a bit more about the crisis, it's causes and the outcome to be expected...and Thai tourism will be hit very hard, indeed.

LaoPo

[VegasVic]

A deep recession in the west wil lead to a very deep recession in Thailand with exports falling sharply as well as thourism. That will lead to a falling Thai Baht.

Tourism will fall because

houseprices in the west have been supporting a boom in peoples private economy where they lended money every year when the house price had gone up, and then spend the money on new cars, travel, new clothes etc. The dropping house prices will lead to consumers saving and having enough problems with paying their mortgages.

Therefore travel to far destinations as Thailand will be hit very hard. That drop in foreign revenue will lead to a falling Thai Baht. All the words from the politicians are only to calm people a little for now. Just take a look at other currencies such as the Korean Won.

applies exclusively to the U.S. of A., definitely not to €urope. but i agree with you that tourism (not only in Thailand but worldwide) will suffer as we are facing a severe global recession which will last longer than some months.

"Applies exclusively to the U.S." Hmm I'll bet I could find a whole lot of homeowners in Ireland, Spain, the U.K., Italy and elswhere aroung the "continent" that would strongly disagree with you Naam!

[CPH]

I think that definately also applies to European and UK homeowners. Below was in Bangkok post today.

Thai baht likely to continue to weaken

"Nicholas Bibby, senior regional economist at Barclays Capital, predicted that the baht was likely to break 38 to a dollar in the first quarter of 2009 and stabilise in the remainder of next year.

"We expect the dollar to strengthen against Asian emerging markets' currencies. The main factor is risk aversion. Also inflows to capital accounts will subdued," he said."

I think it could reach 43 tos USD during next year.

[henryalleman]

Well a few thoughts, Thai's are in a better situtation to ride this out them most westerners, for one reason, family farms. They will have food to eat and palce to stay.

There was an interesting discussion on NBT to day, that revealed a lot. They believe that depreciating the baht will serve no purpose, because no matter what the price there will be no market. Hence no advantage to a lower valued currency.

The one area tht they keep talking about in the tourist trade and they have allowed huge budget to promote it. Actually one of six incentives. If the rate exchange doesn't lossen up Thailand will remain an expensive Asain vacation. There ar simply to many alternatives availble.

situaI would clarify that opening statement to "Thai FARMERS will be in a better situation to ride this out than most westerners" or more accurate yet, farmers throughout the world will be in a bettertion to ride this thing out than urban dwellers! As far as the whole baht devaluing question goes, it is a double edged sword and I would expect that the BOT will be doing a dangerous dance with a foot on each edge for a while No matter how much the TAT spends on advertising the tourisim numbers will be down, and the ammount each of those tourists spend will be down as well, so as we say in Vegas its a double down

I'm afraid that I have to contradict your statement that farmers worldwide will be in a better situation than urban dwellers. You seems to ignore the fact that most western farmers made huge investments and therefore huge loans to pay back. Especcially the ones who are in the meat and milk production, and for the Northern European countries the farmers who suffer from the high energyprices for growing crops under glass. Not yet to mention the over production of food.

[barcelonatio]

First of all.... what the heck does LOS mean? Ladies Of Silom? (HA!) Seriously, I would like to know.

The economy in Spain is tanking beyond belief and next year looks grim. Thailand is similar in that tourism counts for a large part of the economy.... and with political tensions and bombs going off ... that will kill Thailand tourism even more. To devalue the baht sounds like an option considering the low dollar boosted European tourism to the US massively. Plus Thai exports have to have an excellent price or forget it. The dollar used to be 40+ baht and now it's much less. The countries that position themselves well for 2009 will come out okay... those that do nothing will be screwed.

[LaoPo]

First of all.... what the heck does LOS mean? Ladies Of Silom? (HA!) Seriously, I would like to know.

The economy in Spain is tanking beyond belief and next year looks grim. Thailand is similar in that tourism counts for a large part of the economy.... and with political tensions and bombs going off ... that will kill Thailand tourism even more. To devalue the baht sounds like an option considering the low dollar boosted European tourism to the US massively. Plus Thai exports have to have an excellent price or forget it. The dollar used to be 40+ baht and now it's much less. The countries that position themselves well for 2009 will come out okay... those that do nothing will be screwed.

1. LOS means: Land Of Smiles = Thailand.

2. Don't compare Thailand with Spain for many reasons. One of them is that Spain received 60 Million tourists in 2007. Thailand some 13,5 million.

Thailand has a population of around 65 million people, mostly still poor people. Spain has 40 million people and is a highly developed country.

Spain, of course, is suffering badly from it's over-development in real estate.

In 2006 Spain built more houses than the U.K. and Germany combined in the past five years...(think of it, realizing that the UK has some 60 million people and Germany some 82 million; that's a total of 140 million people and Spain has a mere 40 million).

On the other hand: some 2 million foreigners OWN a house in Spain but demand dropped severely in the past 2 years but construction of developments was still underway leaving the country in the real estate mess it's in right now (also due to dramatic rising of mortgage interest percentages).

LaoPo

[Naam]

First of all.... what the heck does LOS mean? Ladies Of Silom? (HA!) Seriously, I would like to know.

The economy in Spain is tanking beyond belief and next year looks grim. Thailand is similar in that tourism counts for a large part of the economy.... and with political tensions and bombs going off ... that will kill Thailand tourism even more. To devalue the baht sounds like an option considering the low dollar boosted European tourism to the US massively. Plus Thai exports have to have an excellent price or forget it. The dollar used to be 40+ baht and now it's much less. The countries that position themselves well for 2009 will come out okay... those that do nothing will be screwed.

i have submitted your scientific anal-ysis to various famous universities (expect honorary Ph.D.s raining on you soon)

p.s. can't make up my mind though whether to suggest you for next year's Gobble Prise in Ekonommiks award.

[ray23]

Reality bites, I can see why the government keeps making positive statements they don't want to see a panic. Not a bad approach however does anyone believe under the current circumstances believe them?

ECONOMY

Firms under pressure: liquidity shortage looms

By The Nation

Published on October 31, 2008

Many Thai businesses anticipate liquidity shortages in the fourth quarter from sluggish economic growth following declines in consumer confidence and the uncertain political situation.

This was the finding of a new survey by the University of the Thai Chamber of Commerce.

"This problem will dampen the Kingdom's economic growth and create a domino effect, with a possible rise in unemployment next year," said Thanawat Polvichai, director of the university's Economic and Business Forecasting Centre.

The centre expects unemployment to reach 2.6 per cent next year, up from 1.7 per cent at present.

Thirty-seven per cent of 800 respondents surveyed from October 20-24 said they had faced difficulties obtaining bank loans, and 63.2 per cent said liquidity shortages would be evident in the fourth quarter. However, 53.4 per cent witnessed no changes in obtaining loans, while credit remained sufficient for 8.4 per cent. Only 0.7 per cent said their bank borrowing was over their limit.

To solve the problem, 86.7 per cent asked for credit in advance, held cash and kept production costs down. The university also called for more economic-stimulus measures and a cut in the policy rate by another 50-100 basis points this year.

Ekchai Nitayakasetwat, dean of NIDA Business School and advisor of Siam City Research Institute, also supported the 0.5-1 per cent rate cut to restore investor confidence, as well as the launch of mega-projects to create jobs and drive economy.

Sukit Udomsirikul, assistant managing director of Siam City Research Institute added that Thailand has a capacity to cushion the impact of the global economic decline, given its strong economic fundamental. He added that the country's economic growth during this year to 2012 would stand between 4 per cent to 6 per cent.

Drops in both orders and revenue are forcing companies to cut their labour force. Some forecasts show between 1 million and 2 million workers could lose their jobs next year.

Ceramics manufacturers in Lampang province, experiencing a 30-per-cent drop in orders from last year's level of Bt1.8 billion, could lay off about 3,000 employees.

"Some small operators are having difficulty obtaining bank loans as lending rules become more stringent. Large operators remain, but they've cut overtime expenses and run their factories for only five days instead of six," said Lampang Federation of Thai Industries chairman Atiphum Kamthornvarin.

Yesterday, about 300 workers of the LPS Business Group and Ruanwan Business Management Co, led by Benjalak Asvakovitwong, gathered at the Labour Ministry asking for help, saying 780 workers had been laid off without compensation. Benjalak said the companies informed the workers only on Wednesday of the lay-offs without any prior notice and no mention of compensation.

Labour Minister Uraiwan Thienthong assured the crowd that the situation might not be as bad as it seemed. She urged all concerned not to panic and said the ministry had measures in place to address the situation.

Uraiwan also pointed out that demand remained for 120,000 jobs.

Thailand Development Research Institute president Nipon Poapongsakorn urged the government to use the extra Bt100 billion announced for fiscal 2009's mid-year budget to create jobs in rural provinces. The National Economic and Social Development Board, the Interior Ministry and local administrations should work together in surveying infrastructure needs across the country.

He said such projects would create jobs and benefit the economy more than would lending the money to villagers. The poor economy and higher unemployment would probably turn such lending sour, but creating jobs would alleviate the economic problems, and the rural provinces would be equipped with better infrastructure.

[quiksilva]

Yup I have seen this first hand, UOB are much stricter right on lending for commercial loans right now, and many of my clients are also reporting similar stories.

[ray23]

Well the spin doctors got busy today

BREAKING NEWS >> Saturday November 01, 2008 15:06

Minister: Thai textile exports still promising

Web www.bangkokpost.com

Thailand's textile exports, particularly to ASEAN member countries, still have room for growth despite the global economic crisis, according to Commerce Minister Chaiya Sasomsap.

Speaking after opening the 23rd Export Clothes Trade Fair being held October 31 to November 9, the minister said he received a report that China would speed up production of textiles and garment for domestic consumption and would compete less with other countries in the export market.

Thailand's textile and garment exports will not be affected by the global economic upheaval, he said confidently.

Mr Chaiya said he believed the country's exports this year would grow more than 15 per cent.

He said the Thai private sector had already adjusted itself in preparation for impacts of the global economic turmoil.

Thai commercial counselors around the world had been instructed to monitor trade data of each country closely so that they could bring the information for international trade.

Thai Clothing Industry Association president Dej Pattanasetpong said several think tanks projected that one million Thais could lose the jobs next year due to the impact of the global economic downturn.

However, in his opinion, Thais employed in the clothing industry will be less affected because many other countries now facing economic difficulties, such as the United States, Europe, Japan, and China, might reduce the number of workers in their textile and garment industries.

So, Thailand should turn this crisis into an opportunity for export expansion because Thai products of quality remain in great demand in the world market, he said. (TNA)

[thailand_tom]

Here in Kanchanaburi tourist numbers are significantly down on this time last year. Owners of guest houses, restaurants and especially bars very unhappy. I expect a shakeout with many small businesses going under, there simply isn't the demand for the amount of supply.

Sadly (and I hate to say it) you haven't seen anything yet!

i couldn't agree, more, this is just the beginning, no tourists, tickets to thailand still 1400-2000usd, dropped only alittle, found the cheapest at 1400usd, yesterday while i was looking i found i could fly from las vegas to new york for 295usd, heading back east to visit my family at that price, baht 34.50, thailand was not cheap at 40 baht.

[MJP]

A deep recession in the west wil lead to a very deep recession in Thailand with exports falling sharply as well as thourism. That will lead to a falling Thai Baht.

Tourism will fall because

houseprices in the west have been supporting a boom in peoples private economy where they lended money every year when the house price had gone up, and then spend the money on new cars, travel, new clothes etc. The dropping house prices will lead to consumers saving and having enough problems with paying their mortgages.

Therefore travel to far destinations as Thailand will be hit very hard. That drop in foreign revenue will lead to a falling Thai Baht. All the words from the politicians are only to calm people a little for now. Just take a look at other currencies such as the Korean Won.

applies exclusively to the U.S. of A., definitely not to €urope. but i agree with you that tourism (not only in Thailand but worldwide) will suffer as we are facing a severe global recession which will last longer than some months.

What?!

Absolutely applies to Europe. During the 'boom' 16% of UK GDP came from mortgage equity withdrawal.

The British economy was almost exclusively based on house price inflation and unsustainable credit and now the biggest asset bubble in history has burst, well, the UK's finished.

Lot's of capital once flowed from the UK to Thailand . . . lot's. Not any more and, with the Baht being as strong as it is, I doubt this will pick up in the next decade.

The materialist Thai is massively dependent on western capital. More than they could ever realise.

I agree the farming families will be relatively better off, but only because everyone else's standard of living is going to drop through the floor.

The one thing Thailand has going for it is it's sufficiency economy.